Wednesday, January 17, 2007

Phone Tax Refund - What a Surprise!

As a small business owner I am always looking for ways to save money on my taxes. I was definitely surprised with this tax refund.

Your 2006 federal income tax return contains a pleasant surprise, the refund of a long-distance telephone tax created to help fund the Spanish-American War.

The tax was adopted as a "luxury" tax in 1898 in the days of Teddy Roosevelt, when only wealthy people had telephone service. Federal courts have ruled that the 3 percent tax does not apply to long-distance service as it is billed today. However, telephone users will continue to pay federal taxes on local service.

Refund amounts vary with the number of a customer's income tax exemptions. For one exemption, the standard refund will be $30; two exemptions, $40; three, $50; four or more, $60.

For many individual taxpayers who want to take the standard amount, there are no additional forms to file, and you only need to fill out one additional line on your regular income-tax return.
Individuals choosing the standard amount can simply fill in the amount on Form 1040, 1040A, 1040NR or 1040EZ. People who don’t need to file a return can use a new, simple form (Form 1040EZ-T) to choose the standard amount.

The 2006 telephone tax refunds are expected to total $10 billion, and they cover long-distance telephone expenses incurred between Feb. 28, 2003, and Aug. 1, 2006. They're available to anyone who paid federal long-distance taxes on landline, cell phone or voice over Internet protocol (VoIP) service.

Think the standard refund isn't enough? If you are one of those people who keep every bill they ever received. There's another option: You could dig through 41 months of old bills to claim the actual long-distance taxes you paid. For more information, go to,,id=161506,00.html.

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